Business-to-business (B2B) debt collection involves recovering money from outstanding commercial payments. Outstanding debts are a nuisance in anyone’s language, but, B2B debts are even more so when compared to Business-to-Consumer (B2C) debts.
There are two important differences between a B2B debt collection and a B2C debt collection, these are:
- Typically, B2B debt collections involve invoices which are significantly larger than invoices owed by customers.
- The existence of strong business relationships impacts the handling of the debt collection process.
In business, recovering debts quickly will save time, money and stress. Ultimately, the objective is to allow a company to focus on day-to-day operations rather than pursuing outstanding debtors.
The debt collection process
The debt collection process can be a minefield of complications, often requiring legal action. This can place enormous strain on a business. A business has a number of strategies to deal with outstanding debts but recovering your debts in the easiest and most cost-effective way is the best possible outcome for all parties involved.
Broadly speaking, expect the following 4 steps in a typical debt collection process:
1. Issuing a demand letter
The demand letter serves to advise the business that a debt is being pursued, and as such, it is an essential piece of communication that can result in either prompt payment or a payment plan – especially if it is issued by legal representation. The demand letter can also provide an opportunity for the debtor to refute the debt. Ultimately, when a debtor responds, the attorney can be certain of the correct contact details for the debtor. This step can also happen with a telephone call.
Debt collection agencies have a number of investigative tactics to locate debtors. As well, various investigative methods can reveal crucial information regarding hidden assets owned by the business which could be used to compensate the creditor.
3. Litigation to recover the debt
If repeated attempts to recover the debt fail, pursuing litigation may be an option. Using a debt collection service to manage this step can alleviate the creditor of the responsibility – and the stress – so that they can focus on running their business instead of the court process. The debt collection agency has the expertise to refer your case for legal representation when required.
4. Collecting payment on a judgement
Once a judgement has been obtained, it may not result in the prompt payment of money that is owed. Instead, it may be necessary to use various tools to recover the business debt following the judgement. Two examples of tools that can be used include, garnishing assets and securing liens.
If your business is facing unpaid commercial debts, start with seeking out a professional Debt Collection Agency to manage the complicated debt recovery process in the easiest way for your peace of mind.